QUOTEBOX: FTC issues rule to fight oil market manipulation

Reuters Staff

3 Min Read

NEW YORK (Reuters) - The U.S. Federal Trade Commission said on Thursday it would impose $1 million per day fines on energy traders engaged in price manipulation, a strong signal of the Obama administration’s desire to crack down on fraud in the oil markets.

The FTC said some of the violations it will seek to punish include false public announcements of planned pricing or petroleum output decisions, false statistical or data reporting, and so-called “wash sales” intended to disguise the liquidity in a market or pricing of a product.

TIM EVANS, ENERGY ANALYST, CITI FUTURES PERSPECTIVE, NEW YORK: “As far as I can tell, the new FTC rule does not expand the definition of activities that might constitute market manipulation, but just raises the potential fines. Since most criminals don’t expect to be caught, I‘m not sure the higher fines will necessarily constitute a major new deterrent. Overall, this seems a relatively minor adjustment that I would not expect to have any impact on trading activity or price levels.”

DAN FLYNN, ANALYST AT PFGBest RESEARCH, CHICAGO: “What makes one a violator is not clear. They’re way too vague. They’re taking speculators out of the market. I see more U.S. jobs lost because, if they can’t do it here, what is to prevent them from doing it somewhere else. We’re getting into over regulation.”

U.S. CASH PRODUCTS TRADERS WHO ASKED NOT TO BE IDENTIFIED: “It really depends on what resources the various agencies throw at (the effort). Most of them are hugely understaffed and don’t really have the caliber of people to do the job. They need to hire more people from our business.”

“I‘m all for getting rid of any market manipulation, if there is any. How the regulations are going to achieve it, I‘m not sure.”

“Well, I have not seen the full details but, to be honest, one would have thought they should have been doing this sort of policing already. Like all of these agencies, none of them appears to be doing what is expected of them.”